Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/39036 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3108
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We introduce tax competition for mobile labor into an optimal-taxation model with two skill levels. We analyze a symmetric subgame-perfect Nash equilibrium of the game between two governments and two taxpayer populations. Tax competition reduces the distortion from the informational asymmetry and increases employment of the less productive individuals. When countries are heterogeneous, this effect is more pronounced in the smaller country.
Subjects: 
optimal income tax
migration
unemployment
tax competition
Leviathan government
JEL: 
F22
H21
Document Type: 
Working Paper
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